What student loan cancellation means for D.C.-area borrowers
President Biden yesterday announced the cancellation of up to $10,000 in federal student loans and $20,000 for Pell Grant recipients, offering some relief to borrowers in our area.
Why it matters: D.C., Maryland, and Virginia residents are among the highest average student loan debt borrowers in the country.
By the numbers: According to data from the Federal Student Aid Office, D.C. borrowers top the charts in student loan debt, owing an average of $55,500.
- Maryland borrowers owe an average of $43,600.
- Virginia borrowers owe an average of $39,800.
How it works: Approximately 20 million Americans could have their debt completely canceled under Biden's announcement, Axios’ Sophia Cai and Erin Doherty report.
- The debt forgiveness for Pell recipients is in addition to the cancellation of up to $10,000 in student debt for other borrowers.
- It will cap monthly payments at five percent of a borrower's monthly discretionary income and forgive loan balances after 10 years of payments for borrowers with loan balances of $12,000 or less, among other measures.
- The $10,000 in debt relief also applies to households that earn $250,000 a year or less.
Between the lines: D.C.’s millennials and residents of color could stand to gain the most from loan forgiveness.
- District residents ages 25-34 owe the most federal student loan debt at $2.8 billion, followed by ages 35-49 at $2.5 billion.
Nationally, Black and African American graduates owe $25,000 more in debt than their white counterparts, according to the Education Data Initiative.
- They’re also more likely to have higher payments, with nearly a third of borrowers making monthly payments of $350 or more.
What they’re saying: Some Washingtonians tell us that Biden's student loan announcement is a game-changer that will help them save money for down payments or pay down car loans. However, others say that $10,000 is a mere drop in the bucket.
Trianna Downing, a 23-year-old living in Columbia Heights, owes just over $16,000 from attending George Washington University.
- The cancellation makes her more at ease about applying to graduate school — but also leaves her torn.
- “Black women owe so much in loans and I feel so fortunate to not have so much to owe, but I feel for my sisters who do,” Downing told Axios.
Janel Forsythe, a 29-year-old D.C. resident, feels similarly, noting that the forgiveness plan eliminates a fraction of the $90,000 she owes.
- “I was raised to value education from my family and community, especially as a young Black woman in this country. But we're disproportionately saddled with all this debt for trying to better ourselves,” she told Axios.
Sarah Sabatke, a 26-year-old Marylander with a combined $89,000 in federal and private loans, also calls Biden's announcement a drop in the bucket, but “better than nothing,” especially since she figures it will cut one year off of her repayment plan, even with interest.
Yes, but: For others, $10,000 of loan forgiveness will make little difference at all. Sabrina Thunder, a 28-year-old Columbia Heights resident, has $58,000 in private loans and has already paid off her federal loans.
Angel Fitzpatrick, a 51-year-old Marylander, has carried her debt for years, she says, working to pay down $400,000 in student loan debt. The cancellation means “next-to-nothing,” she tells Axios.
- Over time, she says, the conditions of her loans have changed, impacting her credit score and her ability to take out a mortgage.
- “Student loans have prevented me from pursuing 'the American Dream' and have continued to disenfranchise me and millions of other women and minorities in this country,” she wrote in an email to Axios.
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